Session 3
Session 3. How Our Form of Capitalism Works: (1) The Power of Entrepreneurs and Corporations. (2) How Big Corporations and Imperfect Competition Are Pervasive Today, But May Actually Be Better for Economic Well-being than Perfect Competition. (3) Alternative Forms of Market System. (4) Final Picture of Contemporary Capitalism.
Read first: Lindblom, "How It Works: Enterprise and Corporation," The Market System, pp. 61-84.
Then read: Joseph Schumpeter, "The Process of Creative Destruction," "Monopolistic Practices," Capitalism, Socialism, and Democracy, pp. 81-106.
Then: Charles E. Lindblom, "Alternative Market Systems," and "The Market-oriented Private Enterprise System," Politics and Markets: The World’s Political-Economic Systems (Basic Books, 1977), pp. 93-116.
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David Ciepley, "Beyond Public and Private: Toward a Political Theory of the Corporation," American Political Science Review 107 (2013): 139-158.
Argues that big 21st-century joint-stock business corporations aren’t creatures of the free market that are
colonizing the rest of life, but rather governmental creations that are colonizing the free market, as well as the rest
of life. Also argues from the differences between the legal rights and duties of partnerships and limited-liability corporations to two views: first, that corporate property is a distinct kind of property, neither private nor public;
second, that the idea that public corporations are nexuses of contracts among their shareholders should not be
taken as anything besides a limited metaphor, useful only for some highly specific purposes. Corporations are not, the argument holds, best seen for most purposes as nexuses of contracts.
Edward S. Herman, Corporate Control, Corporate Power (Cambridge University Press, 1982)
Argues that those big corporations are basically able to avoid government regulation, and that their managers control them, so that corporations are basically uncontrolled by either government or shareholders.
Joan Robinson, The Economics of Imperfect Competition (London: Macmillan 1961)
One of the great analyses of monopolistic competition in industries dominated by a few giant firms.
F. M. Scherer, "The Dynamics of Capitalism," Oxford Handbook of Capitalism, pp. 129-160. [ClassesV2]
Focuses on the fluctuations in the economy as capitalism proceeds through time: economic growth, booms and busts, dissemination of new technology, decreases and increases in income and wealth equality.
A. D. Lindsay [Lord Lindsay], "The Philosophy of the British Labour Government," in Ideological Differences and World Order: Studies in the Philosophy and Science of the World's Cultures, ed. F. S. C. Northrop (Yale UP, 1949): 250-268.
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As Lindblom shows, one of the famous market systems that is an alternative to capitalism is market socialism, in which the government owns most, many, or some of the leading means of production, but allows them to
operate mostly under free market pressures. A famous experiment in market socialism occurred just after World War
II, when Britain's Labour Party won power in a landslide electoral victory. They promptly set about nationalizing
several industries, and setting up the famous National Health Service. This paper by a well-known British political
philosopher sets out the political principles underlying the Labour Government's postwar policies of market
socialism. It claims that there is a tight connection between those policies and Labour's desire for workplace democracy, and shows how those principles are rooted in the Fabian Socialism advocated by Beatrice and Sidney
Webb, George Bernard Shaw, H. G. Wells, and others. (It is these Labour policies, above all else, that Hayek denounces in The Road to Serfdom.)